Nordic Tax Law Bulletin - April 2026

Highlights from Norway

• Repayment of paid-in capital: Recent court decision and proposed amendments to the tax rules

Court case summary

In 2013, an individual taxpayer (A) acquired all the shares in a former hotel investment company (the Company). At the time of acquisition, the Company had essentially no business activities, but the shares in the Company carried a paid-in capital tax position of approximately NOK 3bn, and the Company had a tax loss carry forward of about NOK 50m. 

A paid NOK 189m for the Company, an amount equal to the Company's net cash balance and an additional NOK 5m for the tax loss carry forward. 

Under Norwegian tax law, repayment of paid-in capital is generally not treated as taxable dividend. Further, the paid-in capital position is attached to the shares (not the shareholder), meaning it is normally irrelevant for the right to receive tax-free repayments of paid-in capital whether it is the shareholder who originally contributed the capital. 

Under the Norwegian General Anti-Avoidance Rule (GAAR), a tax benefit may be denied if an arrangement, or multiple interrelated arrangements, indicates that the main purpose was to achieve a tax advantage and that, based on an overall assessment, the arrangement(s) cannot form the basis of taxation. 

Following A's acquisition of the Company, the Company was used as an investment/holding vehicle alongside A's hotel business. The Company subsequently generated profits and made distributions to A in the amount of approximately NOK 800m in the following years. A reported the distributions as tax-free repayment of paid-in capital, rather than taxable dividends. 

The Norwegian Tax Authorities had denied A's use of the paid-in capital position under the GAAR (then non-statutory, now largely continued in Section 13-2 of the Norwegian Tax Act) and claimed payment of dividend tax of approximately NOK 400m following distributions from the Company. 

A brought the case before the District Court (TOSL-2023-51015), but succeeded only in part (the District Court accepted that paid-in capital equal to the amount of equity in the Company at the time of acquisition, NOK 186m, could be distributed tax-free). 

In November 2025, the Appeals Court denied A's utilization of the paid-in capital in full (LB-2024-93254). 

A's main argument was that the main purpose of the acquisition was an "interest arbitrage": the Company held a fixed-rate 5% seller loan (receivable) while A planned to finance the acquisition with a cheaper floating-rate bank debt (around 3.7%), thereby earning the spread as a largely low-risk return (A referred to roughly NOK 10-11m over the remaining term). 

The Appeals Court did not agree with A's calculations of the "interest arbitrage", found that it was not nearly as valuable as A suggested, and that the acquisition therefore had limited commercial rationale. 

The Appeals Court therefore concluded that the main purpose of the acquisition was to utilize the paid-in capital position on the shares by way of tax-free repayments to A personally, and that the arrangements could not form the basis for taxation. 

The Appeals Court also denied utilization of the Company's tax loss carry forward under the Norwegian Special Anti-Avoidance Rule for generic tax attributes (then Section 14-90 of the Norwegian Tax Act, now largely continued in Section 13-3), largely based on the same argumentation. 

A sought leave to appeal to the Norwegian Supreme Court regarding both the paid-in capital and the tax loss carry forward, but the appeal was refused (HR-2026-674-U) in March 2026. 

Public consultation on paid-in capital rules

In connection with presentation of the Norwegian State Budget in the fall of 2025, the Norwegian Ministry of Finance circulated for public consultation proposed amendments to the rules on tax-free repayment of paid-in capital. The following two main alternatives were presented:

1. Alternative 1 – paid in capital remains, but tax-free repayment is capped at the shareholder's cost price of the share.

   This would mean that if shareholder A has contributed NOK 100 as paid-in capital and then sells the shares to B for NOK 50, B would only be entitled to tax-free repayment of up to NOK 50 (i.e., B's cost price), even if the shares carry a higher paid-in capital position.

2. Alternative 2 – tax-free repayment up to the shareholder's cost price, regardless of historical paid-in capital on the shares. 

   This would mean that if shareholder A has contributed NOK 10 as paid-in capital on the shares, and A sells the shares to B for NOK 200, B would be entitled to tax-free repayment of NOK 200 (i.e., B's cost price), irrespective of the historical paid-in capital on the shares. 

Other possible solutions were also assessed, including abolishing the right of tax-free repayment of paid-in capital in its entirety. 

Alternative 2 received considerable support in the public consultation. However, it was also met with material criticism, including from the Norwegian Tax Directorate. The Directorate noted that Alternative 2 would, inter alia, largely imply a de facto permanent exemption from Norwegian withholding tax for foreign shareholders, since repayments of paid-in capital are generally not subject to Norwegian withholding tax under current law. The Norwegian Confederation of Trade Unions (LO) supported abolishing the rules on repayment of paid-in capital in their entirety

Key takeaways 

Both Norwegian and international investors in Norwegian companies should be mindful of (i) the Norwegian anti-avoidance framework, which may restrict reliance on historical paid-in capital positions (and tax loss carry forward) in certain acquisition and distribution scenarios, and (ii) the ongoing legislative work to amend the paid-in capital regime (including proposals that would limit tax-free withdrawals to the shareholder’s own cost basis).

Transactions and structures that may warrant particular attention include acquisitions of companies with significant paid-in capital positions and/or tax losses carry forward positions relative to purchase price. 

DLA Piper is monitoring the legislative process closely and can assist with assessing exposure under the anti-avoidance rules, evaluating alternative structuring and distribution options, reviewing documentation, and assisting with reporting to the Norwegian Tax Authorities to support the intended tax treatment. 

Highlights from Sweden

• Unrealised derivative value changes classified as “interest” must be included in taxable income for in-scope companies (Case No. 1050-25)

In Case No. 1050-25, the Swedish Supreme Administrative Court (the “SAC”) considered whether an unrealized value change on a derivative instrument, which under Chapter 24 of the Swedish Income Tax Act is deemed to constitute “interest income” or “interest expense”, must affect taxation in the year the value change arises.

As a starting point, value changes on capital assets generally affect taxable income upon disposal. Receivables and liabilities in foreign currency are generally valued at the year-end exchange rate, with exchange rate movements taxed on an ongoing basis.

The case concerned the Company’s tax year 2019. The Company reported an unrealized increase in value on derivatives hedging exchange rate movements on foreign-currency loans as non-taxable income. The amount was stated to be approximately SEK 215 million. The Swedish Tax Agency taxed the increase and imposed a tax surcharge, taking the view that the Company had made an incorrect statement by not declaring the amount as taxable (with the surcharge calculated at a reduced rate as a timing error).

The SAC granted leave to appeal limited to whether the “interest” classification in Chapter 24, section 4(2) entails that the value change must be taxed in the year it arises. The Tax Agency argued that the value increase was interest income taxable despite no disposal of the derivative, and that a surcharge should apply. The Company argued that there was no legal basis for ongoing taxation. It maintained that the rule only affects the net interest amount calculation and does not displace the disposal principle for capital assets.

The SAC noted that section 4(2) refers to the valuation method in Chapter 14, section 8 (valuation at the year-end rate), and held that the provision therefore addresses both what is treated as “interest” and how it is to be periodized. The SAC further reasoned that an item can only be included in a given year’s net interest amount if it is also deducted or taxed that year. Accordingly, the relevant value changes must be included in the taxable result in the same year.

The SAC declared that companies subject to Chapter 24, sections 21 to 29 must include such derivative value changes in taxable income for the year in which they arise. For entities not covered by the regime, the SAC stated that section 4(2) lacks relevance, and the judgment indicates taxation upon disposal.

• Revaluation of the VAT taxable amount for intra-group services (Case No. 3217-21)

In Case No. 3217-21, the Swedish Supreme Administrative Court (the “SAC”) ruled on VAT and a related tax surcharge in a case concerning the determination of the market value of services supplied by a parent company to its subsidiaries when applying the Swedish VAT rules on revaluation of the taxable amount.

Under the revaluation rules, the VAT taxable amount is generally the consideration for the supply, but it may, under certain conditions, be adjusted to market value, including for intra-group services supplied to a purchaser without full input VAT deduction. The market value of a service is normally the amount the purchaser would pay an independent supplier. If no comparable supply can be identified on the open market, market value may instead be determined on the basis of the supplier’s cost of providing the service. The case was decided under the former Swedish VAT Act (1994:200), which remained applicable, by virtue of transitional provisions, after the new VAT Act (2023:200) entered into force. The SAC noted that substantially equivalent rules exist in the new Act.

The case concerned a parent company in a real estate group whose economic activity consisted of actively managing its subsidiaries by supplying, inter alia, corporate management, finance, property management, investments, IT and HR and administrative services. In 2016, the group had 19 direct or indirect subsidiaries. The parent charged approximately SEK 2.3 million in total for the services, whereas its total costs amounted to approximately SEK 28 million, including costs that the company considered to be capital-raising and shareholder-related. The company deducted all input VAT, including VAT related to such capital-raising and shareholder-related costs.

The Swedish Tax Agency considered that the services had been supplied at a price below market value and revalued the taxable amount by applying the cost-based method. The Tax Agency took the view that there were no comparable supplies on the open market and that the company’s entire cost base was attributable to the intra-group services; a tax surcharge was also imposed. The Administrative Court annulled the Tax Agency’s decision, reasoning (among other things) that shareholder costs are not self-evidently costs for supplying administrative services and that the Tax Agency had not made it likely that the consideration was below market value. The Administrative Court of Appeal, however, sided with the Tax Agency, holding that no open-market services corresponded to those supplied by the parent and that all costs should therefore be taken into account when determining market value.

The SAC requested a preliminary ruling from the Court of Justice of the European Union (“CJEU”). In its judgment in C-808/23, the CJEU held (in summary) that it is incompatible with Articles 72 and 80 of the VAT Directive to treat such intra-group management services as unique supplies in all cases, thereby excluding the comparison method for establishing market value. The CJEU also considered that the services in the case did not constitute a single indivisible economic supply, but rather appeared to be separate supplies even if provided together and priced as a total package.

Against that background, the SAC held that the Tax Agency bears the burden of proving that the consideration was below market value and that the assessment must proceed on the premise that there were several separate supplies. As regards the corporate management service, the SAC rejected the Tax Agency’s argument that the service was unique merely because it was expensive to produce. The SAC stated that the cost-based method presupposes that the Tax Agency first demonstrates that no comparable service exists on the open market, which the Tax Agency had not made likely in this case. As regards the other services, the SAC held that any revaluation must be performed separately for each service. Since the Tax Agency had not presented material enabling an assessment of the market value of each individual service, there was no basis for revaluation of those services either.

The SAC therefore allowed the company’s appeal, set aside the appellate court’s judgment in the parts concerning VAT and the tax surcharge, and upheld the Administrative Court’s outcome in those parts. The SAC also partly awarded the company reimbursement of costs in the SAC.

Highlights from Finland

• Tax legislation changes effective as of 1 January 2026

Extension of tax‑neutral share exchange rules

The Finnish tax‑neutral share exchange regime has been broadened. The rules now also apply to share exchanges involving companies resident outside the European Economic Area, provided that certain additional requirements are met. As a result, it has become possible, for example, to implement a so‑called US Flip in a tax‑neutral manner through a qualifying share exchange.

The additional conditions for tax neutrality include, inter alia, the existence of a valid tax treaty between Finland and the relevant jurisdiction, an adequate level of corporate taxation in the target country, and the requirement that the foreign entity is organized in a corporate form comparable to a Finnish limited liability company.

In addition, the maximum permissible cash consideration in a tax‑neutral share exchange has been increased from 10 percent to 50 percent. In cases where the shares do not have a nominal value, the maximum cash consideration is now determined by reference to the total subscription price recorded in equity (e.g. the invested unrestricted equity fund, in Finnish SVOP), rather than the amount recorded as share capital, as was the case under the previous rules.

Taxation of conditional additional purchase price (e.g. earn‑out)

The rules governing the taxation of conditional additional purchase price arrangements have been amended both for income tax and transfer tax purposes.

From an income tax perspective, where the basis and amount of a conditional consideration are confirmed only after the tax year in which the underlying transaction takes place, the capital gain attributable to the conditional consideration is now taxed in the tax year in which the basis and amount are finally confirmed. Prior to the changes, based on the case law, an additional purchase price that was confirmed after the year of the transaction could, in certain circumstances, nevertheless be taxed in the transaction year.

From a transfer tax perspective, the new rules provide that transfer tax on additional consideration must be paid within two months from the date on which the basis and amount of the additional consideration are confirmed, if such confirmation takes place after the original transfer tax payment deadline. Previously, in additional consideration situations, the Tax Administration required taxpayers to estimate the amount of the contingent consideration and to pay transfer tax based on that estimate within the statutory deadline following execution of the transfer agreement, even where the final amount was not yet known.

Overall, the amendments are favourable for taxpayers, as they reduce both the complexity and the administrative burden associated with arrangements involving conditional additional purchase prices.

• Supreme Administrative Court decision on the temporary profits tax

In a decision dated 3 February 2026, the Supreme Administrative Court declined to grant leave to appeal to the Tax Recipients’ Legal Services Unit in a case concerning the Act on Temporary Profit Tax on the Electricity and Fossil Fuel Sectors (the “Profits Tax Act”).

In the underlying ruling, the Administrative Court had held that the provisions of the Profits Tax Act applicable to the electricity sector were incompatible with EU Regulation 2022/1854, particularly as regards the level of taxation, the calculation method and the period of application. The court concluded that the taxpayer who had requested an advance ruling could not be required to pay profit tax calculated pursuant to the Profits Tax Act, at least for the period during which the EU Regulation remained in force.

As leave to appeal was denied, the Administrative Court decision of 9 June 2025 became final. In practice, this renders the Profits Tax Act ineffective, as its key provisions can no longer be applied. Taxpayers to whom the Profits Tax Act has been applied may therefore consider requesting a correction of their tax assessments.

• Reform of the Finnish gambling system: lottery tax and supervision fee

A comprehensive reform of the Finnish gambling system was approved on 16 January 2026. Under the current regime, only the state‑owned company Veikkaus Oy holds the exclusive right to provide gambling services in Finland. Under the new Gambling Act, operators may apply for licences from the National Police Board starting from 1 March 2026, and licensed gambling services may be offered from 1 July 2027 onwards. Veikkaus Oy will retain its monopoly until the end of June 2027.

Licensed operators will be subject to lottery tax, which is a self‑assessed tax. Operators are required to report and pay the tax directly to the Tax Administration. The tax base is the gaming margin, defined as stakes placed minus winnings paid. The applicable tax rate will be 22 percent as of 1 July 2027. In addition, licensed operators will be required to pay an annual supervision fee intended to finance regulatory oversight by the Licensing and Supervisory Authority. The fee will be determined based on the operator’s gaming margin.

From the players’ perspective, winnings derived from gambling offered by licensed operators will be tax‑exempt. Moreover, winnings from unlicensed EEA operators will be tax‑exempt unless the games are deemed to be offered in Finland. Winning from unlicensed non-EEA operators will be taxable. According to the Government Bill, an operator may be considered to offer games in Finland if, for example, its website is available in Finnish, the operator markets its services in Finland or to Finnish residents, or the operator accepts Finnish residents as customers. In practice, particularly due to the last criterion, the threshold for considering games to be offered in Finland appears relatively broad.

• Finnish Central Tax Board (“CTB”) issued a ruling regarding Finland`s right to tax capital gains on shares in Real Estate rich companies on 27 February 2026.

According to the facts of the ruling, a non-Finnish resident company A Ltd intended to dispose of shares in a Finnish company B Ltd. B Ltd acted as a holding company within a group focused on real estate ownership and leasing. Its activities consisted of owning shares in three Finnish real estate companies and providing a limited amount of administrative and management services to these subsidiaries. B Ltd had no employees and no other significant assets. One of the three real estate companies, a Real Estate Company C (“C Ltd”), owned a property located in Finland and generated rental income. The other two companies had no material activity or assets at the time the advance ruling was requested.

The CTB assessed Finland’s taxing rights under Section 10(10) and 10(10a) of the Finnish Income Tax Act, concerning income deemed to be sourced in Finland, and Article 13(2) of the Nordic Tax Treaty, which allows the source state to tax gains from the disposal of shares in companies whose assets consist, directly or indirectly, of more than 75% immovable property situated in that state, and whose principal purpose is the ownership of immovable property.

The CTB confirmed that the property owned by C Ltd constituted Finnish immovable property within the meaning of Finnish tax law. B Ltd did not hold any other significant assets directly or indirectly. In addition, since more than 75% of B Ltd’s assets (directly and indirectly held) consisted of Finnish real estate, the quantitative threshold set out in the Nordic Tax Treaty was met. Moreover, the CTB held that, when interpreting Article 13(2) of the Nordic Tax Treaty as a whole, a company’s principal purpose may be considered the ownership of immovable property even where such property is held indirectly, through subsidiary companies. Against this background, the CTB concluded that B Ltd’s principal purpose was the ownership of immovable property.

The CTB concluded that Finland was entitled to tax the capital gain arising from A Ltd’s disposal of the shares in B Ltd, even though the seller was a non-Finnish resident taxpayer. The important factor in the ruling was that B Ltd’s primary purpose was deemed to be the ownership of real estate, even though B did not own any real estate directly. Although the ruling is not yet final, it should be taken into account when structuring real estate investments in Finland.

Highlights from Denmark

• Updated OECD model commentary on permanent establishment

In the years following COVID‑19, remote work has become an increased feature of the labour market. Many companies now employ full‑time staff who primarily work from home, despite the employer being resident in another jurisdiction. This development has increased the importance of understanding when a home office may constitute a permanent establishment (PE).

In Denmark, case law in recent years has taken a relatively strict and somewhat unclear approach. Several decisions — particularly those involving employees with managerial responsibilities — have found that home offices can trigger a PE in Denmark. This has created uncertainty for foreign companies hiring Danish‑based employees.

OECD introduces clearer, more unified guidance

At the end of 2025, the OECD updated its commentary on home offices and PEs with the aim of creating a more consistent international approach. 

The updated guidance introduces two central criteria:

1. The 50% rule over a 12‑month period If an employee works less than 50% of their time from a home office, the home office should generally not create a PE.
2. If the employee works 50% or more from the home office, a further assessment must be made based on the specific facts and circumstances.

Emphasis is placed on the employee’s actual working pattern. A company’s internal policy on the use of a home office is merely indicative when assessing whether a permanent establishment exists. It should also be noted that where work from the home office is organised in recurring periods (for example, three‑month intervals), these periods will be assessed cumulatively.

Commercial interest

If the 50% threshold is exceeded, it should subsequently be analysed whether the foreign employer has commercial interest in the employee being physically present in Denmark. The purpose of the test is to certify that a permanent establishment only exists when there is a genuine commercial reason for the employee working from a home office in another country, as opposed to purely personal reasons, e.g., due to family etc.

The OECD commentary notes that such commercial interest may exist where the employee:

• Meets with customers or suppliers
• Works on establishing new business relationships
• Provides service, training, or support requiring physical presence
• Collaborates with local partners or research environments

What does this mean for companies?

While the OECD commentary does not override domestic law, it is highly influential and is expected to guide future interpretation in Denmark. The Danish tax agency has recently included a note in the legal guidelines (in Danish: Den juridiske vejledning), stating that the updated OECD commentary will soon be included in the guidelines. Compared to the strict and sometimes unpredictable approach seen in recent Danish rulings, the OECD’s framework hopefully introduces clearer thresholds and a more structured assessment.

This development is a positive step for companies employing Danish‑based remote workers. It does not eliminate the need for case‑by‑case analysis — particularly for employees with customer‑facing or managerial roles — but it should provide a more transparent and internationally aligned basis for evaluating PE risk.

• The Hidden Impact of Intra-company Loans

A recent Danish ruling confirms that intra-group loans may be excluded from the VAT pro rata as incidental financial transactions, yet the same loans can unexpectedly trigger special payroll tax registration and reporting obligations.

In the ruling, the Danish Tax Appeals Tribunal held that interest income from intra-group loans constituted a financial incidental transaction. The Tribunal found that the granting of the loans did not have a sufficiently direct and permanent link to the company’s taxable supplies and involved only a very limited use of taxable goods or services as in accordance with the criteria set forth in the ECJ case C-306/94 Régie Dauphinoise. Accordingly, the interest income was not to be included in the VAT pro rata calculation and did not reduce the company’s right to deduct input VAT on overhead costs.

At the same time, the Tribunal confirmed that the lending activity was a taxable transaction subject to the exemption on financial services. As a consequence, the company was considered liable under the special Danish payroll tax regime.

The ruling highlights a risk that we often identify during due diligence processes which many companies have not been aware of: intra-company financing can create special payroll tax exposure. Companies should assess whether their intercompany loans qualify as incidental transactions and monitor whether the DKK 80,000 threshold for special payroll tax registration is exceeded. Companies already registered must ensure that relevant salary costs are correctly included in their special payroll tax filings.